Diversity and inclusion (D&I) practices and its relationship with firm performance
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Аннотация
Contents 7
Introduction 8
Chapter 1. Diversity and inclusion specifically as the part of organizational structure 10
1.1. Definition of diversity and inclusion 10
1.2. Diversity as the phenomena 10
1.3. Current trends in D&I research 14
1.4. Diversity and work performance 14
Chapter 2. Factors that influence diversity and inclusion 19
2.1. Internal and external factors influencing diversity and inclusion in the organization ... 19
Chapter 3. Effects of diversity and inclusion management 23
3.1. D&I practices, and its effect on work performance 23
3.2. Managing diversity and inclusion through practices 26
3.3. Effects of diversity management 34
Chapter 4. Research results 39
4.1. Data collection 39
4.2. Methodology and analysis 42
4.3. Conclusion 48
Bibliography 51
Appendices 58
Appendices 1. Questionnaire 58
Contents 7
Introduction 8
Chapter 1. Diversity and inclusion specifically as the part of organizational structure 10
1.1. Definition of diversity and inclusion 10
1.2. Diversity as the phenomena 10
1.3. Current trends in D&I research 14
1.4. Diversity and work performance 14
Chapter 2. Factors that influence diversity and inclusion 19
2.1. Internal and external factors influencing diversity and inclusion in the organization ... 19
Chapter 3. Effects of diversity and inclusion management 23
3.1. D&I practices, and its effect on work performance 23
3.2. Managing diversity and inclusion through practices 26
3.3. Effects of diversity management 34
Chapter 4. Research results 39
4.1. Data collection 39
4.2. Methodology and analysis 42
4.3. Conclusion 48
Bibliography 51
Appendices 58
Appendices 1. Questionnaire 58
The research discusses diversity and inclusion (D&I) practices and its relationship with firm performance. The work will help companies to understand the value of D&I programs (practices) and its relationship with firm’s outcomes, such as innovation activities, absorptive capacity, and performance.
Researchers claim about importance D&I practices in an organizational context by investigating positive effects on companies, teams, and employees, including building human resource management (HRM) systems to implement D&I as a long - term strategy (Budhwar, 2015).
D&I is about how people with diverse background feel at work. The company strives to create an inclusive environment where employees are open minded, free from prejudice, flexible and adaptive. Thus, D&I culture has a positive effect on personal level (involvement, motivation, job satisfaction); social level (innovativeness and creativity of teams); organizational level (company growth, profitability).
D&I practices are applied at different stages of employee development in a company: recruitment, adaptation, development, assessment, talent management, promotion/dismissal.
According to a 2015 Deloitte study, companies that embrace diversity are more adaptable to a changing environment, the have more chances to achieve their financial goals and more likely will show good business results (Bourke, 2015).
Diversity improves not only financial performance, but also innovative solutions. According to BCG research, organizations with a low level of diversity increased revenue from implemented innovations by 26%, and in companies with a high level - by 45%. Six criteria for diversity were taken into consideration: age, gender, ethnicity, career path, industrial experience, and educational level. (Lorenzo, Voigt, et al., 2017).
Since we performed a literature review, we can see the overall gap which shows the lack of evidence of relationship between the diversity and inclusion practices and work performance. Main issue is little knowledge about operationalization and limited studies of empirical research. Different researchers draw attention that a companies with diverse team perform better, but it is not completely clear which factors influence the success of the company.
Research goal: To investigate the relationship between D&I practices and firm performance.
Following from the research goal we can assume that the research questions might be following:
Is there any relationship between diversity and inclusion practices and firm performance?
Other research questions that shape the research are:
• What are determinants of D&I programs that moderate firm performance?
• How D&I practices shape firm’s innovation activity and absorptive capacity?
Object: Companies with diversity and inclusion practices.
Subject: Diversity and inclusion practices.
Aiming to answer those questions quantitative method of the research will be applied. For quantitative method a questionnaire was created. We selected respondents based on presence of diversity and inclusion practices inside the company and their positions were primarily from Human resource and Talent management departments. Mainly it is important to find the answers for the research questions and practices companies implement.
Researchers claim about importance D&I practices in an organizational context by investigating positive effects on companies, teams, and employees, including building human resource management (HRM) systems to implement D&I as a long - term strategy (Budhwar, 2015).
D&I is about how people with diverse background feel at work. The company strives to create an inclusive environment where employees are open minded, free from prejudice, flexible and adaptive. Thus, D&I culture has a positive effect on personal level (involvement, motivation, job satisfaction); social level (innovativeness and creativity of teams); organizational level (company growth, profitability).
D&I practices are applied at different stages of employee development in a company: recruitment, adaptation, development, assessment, talent management, promotion/dismissal.
According to a 2015 Deloitte study, companies that embrace diversity are more adaptable to a changing environment, the have more chances to achieve their financial goals and more likely will show good business results (Bourke, 2015).
Diversity improves not only financial performance, but also innovative solutions. According to BCG research, organizations with a low level of diversity increased revenue from implemented innovations by 26%, and in companies with a high level - by 45%. Six criteria for diversity were taken into consideration: age, gender, ethnicity, career path, industrial experience, and educational level. (Lorenzo, Voigt, et al., 2017).
Since we performed a literature review, we can see the overall gap which shows the lack of evidence of relationship between the diversity and inclusion practices and work performance. Main issue is little knowledge about operationalization and limited studies of empirical research. Different researchers draw attention that a companies with diverse team perform better, but it is not completely clear which factors influence the success of the company.
Research goal: To investigate the relationship between D&I practices and firm performance.
Following from the research goal we can assume that the research questions might be following:
Is there any relationship between diversity and inclusion practices and firm performance?
Other research questions that shape the research are:
• What are determinants of D&I programs that moderate firm performance?
• How D&I practices shape firm’s innovation activity and absorptive capacity?
Object: Companies with diversity and inclusion practices.
Subject: Diversity and inclusion practices.
Aiming to answer those questions quantitative method of the research will be applied. For quantitative method a questionnaire was created. We selected respondents based on presence of diversity and inclusion practices inside the company and their positions were primarily from Human resource and Talent management departments. Mainly it is important to find the answers for the research questions and practices companies implement.
The focus of this research is on relationship between diversity and inclusion and firm performance. The main goal was to identify the existence of this relationship and analyze its effect. In the master thesis we observe the literature on the topic and view the existing results of the diversity and inclusion effect on the firm performance. In the first part of master thesis, we focus on the research questions and the existing gap. Following from that we observe the literature were practices are discussed and it’s results on work performance.
From identifying research gap from the literature, we formulated research questions. They are focused on searching the link between diversity and inclusion and firm performance, factors effecting diversity practices on the country and firm level, and how D&I practices shape firm’s innovation activity and absorptive capacity. Following from the literature review we describe chosen methodology, the processes of data collection and respondent answers. As a result, we analyzed three research questions to which we found what outcomes have a positive result through fsQCA analysis. Additionally, the main practices of attracting, developing, and retaining diverse talent were identified. From the analysis we preformed we can see that the outcome from the survey results positively supports the conclusion.
As for theoretical contribution, the master thesis is covering the above-mentioned research gap and provide insights about D&I practices in the companies. Moreover, the study is contributing to research of trends of the D&I in the companies, its implications, effect of the working environment and lack academic research. Since we witness the lack of academic research this master thesis provides basis for the future research. Additionally, besides analyzing the effect of diversity and inclusion practices on the company’s performance it additionally identifies factors which influence formation and application of diversity and inclusion practices in the company on country and firm level. Our study contributes by extending the knowledge about operationalization of the diversity management in organizational environment. We managed to find the positive relationship between diversity and inclusion practices by preforming necessary condition analysis in which all of the five outcomes have a positive result, meaning diversity and inclusion practices can positively influence firm performance.
Managerial implications of the study are paying attention to the different diversity practices in the companies and its implication. Particularly, managers could understand which D&I practices are the most used in the companies and how differently all of them effect companies’ performance. From analyzing results of questionnaire, we could identify the main practices in the companies that help attract, develop and retain talent. Those practices are:
Attraction practices:
• Internships
• Partnerships with universities
• Building strong employer brand in the social media
• Target diverse people through different social media with advertising posts
Development practices:
• Learning platforms with gamified coins
• Mentoring system
• Team building events
• Personalization
• Inclusive leadership programs
• Flexible office
Retaining practices:
• Awarding systems
• Every month bonuses
• Remote work options
• Mental health support
• Feedback on the performance....
From identifying research gap from the literature, we formulated research questions. They are focused on searching the link between diversity and inclusion and firm performance, factors effecting diversity practices on the country and firm level, and how D&I practices shape firm’s innovation activity and absorptive capacity. Following from the literature review we describe chosen methodology, the processes of data collection and respondent answers. As a result, we analyzed three research questions to which we found what outcomes have a positive result through fsQCA analysis. Additionally, the main practices of attracting, developing, and retaining diverse talent were identified. From the analysis we preformed we can see that the outcome from the survey results positively supports the conclusion.
As for theoretical contribution, the master thesis is covering the above-mentioned research gap and provide insights about D&I practices in the companies. Moreover, the study is contributing to research of trends of the D&I in the companies, its implications, effect of the working environment and lack academic research. Since we witness the lack of academic research this master thesis provides basis for the future research. Additionally, besides analyzing the effect of diversity and inclusion practices on the company’s performance it additionally identifies factors which influence formation and application of diversity and inclusion practices in the company on country and firm level. Our study contributes by extending the knowledge about operationalization of the diversity management in organizational environment. We managed to find the positive relationship between diversity and inclusion practices by preforming necessary condition analysis in which all of the five outcomes have a positive result, meaning diversity and inclusion practices can positively influence firm performance.
Managerial implications of the study are paying attention to the different diversity practices in the companies and its implication. Particularly, managers could understand which D&I practices are the most used in the companies and how differently all of them effect companies’ performance. From analyzing results of questionnaire, we could identify the main practices in the companies that help attract, develop and retain talent. Those practices are:
Attraction practices:
• Internships
• Partnerships with universities
• Building strong employer brand in the social media
• Target diverse people through different social media with advertising posts
Development practices:
• Learning platforms with gamified coins
• Mentoring system
• Team building events
• Personalization
• Inclusive leadership programs
• Flexible office
Retaining practices:
• Awarding systems
• Every month bonuses
• Remote work options
• Mental health support
• Feedback on the performance....
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